MAS obtains Default Judgement of $2.97M against Norman Phua Chun Han for Insider Trading and Employment of Manipulative and Deceptive Devices

Singapore, 1 April 2014… The Monetary Authority of Singapore (MAS) commenced civil penalty court action against Mr Norman Phua Chun Han and has been awarded a default judgment of $2,965,414.75 against Mr Phua, comprising a civil penalty amount of $2,865,414.75, for insider trading under Section 218(2)(a) and/or Section 218(2)(b) of the Securities and Futures Act (SFA), and $100,000, for the employment of manipulative and deceptive devices in connection with the purchase and sale of securities under Section 201(b) of the SFA.

2   On 18 February 2008, OCBC Bank Ltd announced that Asia Pacific Links Ltd (APL) intended to make a voluntary conditional cash offer for all the issued ordinary shares of Jade Technologies Holdings Ltd (Jade) at 22.5 cents per share and that APL, together with Mr Anthony Soh Guan Cheow, then the Chief Executive of Jade held approximately 46.54% Jade shares (Takeover Announcement). After the release of the Takeover Announcement, the shares of Jade closed at 22 cents, 12.8% above the last traded price prior to the announcement. On 5 April 2008, Jade announced that APL had written to the Securities Industries Council for consent to withdraw the takeover offer and that the offer was withdrawn with immediate effect (Withdrawal Announcement). After the release of the Withdrawal Announcement, the shares of Jade closed at 6.5 cents, a 70% decline from the last traded price prior to the announcement.

3   Between November 2007 and April 2008, Mr Phua was the assistant to Mr Anthony Soh. While in possession of non-public and materially price-sensitive information concerning the proposed takeover of Jade, Mr Phua used securities trading accounts maintained by Mr Ng Yu Jin with OCBC Securities Pte Ltd (OSPL) on 31 January, 5 February and 13 February 2008 to purchase a total of 2,650,000 shares of Jade, for his own benefit. Mr Phua made a profit of $50,160.90 from these trades. Subsequently, while in possession of non-public and materially price-sensitive information concerning the withdrawal of the offer, Mr Phua used Mr Ng’s securities trading accounts maintained with OSPL on 31 March and 1 April 2008 to sell a total of 7,071,000 shares of Jade, for his own benefit. Mr Phua avoided a loss of approximately $1,096,005 from these trades. By using Mr Ng’s trading accounts held with OSPL to trade in the shares of Jade, Mr Phua had also deceived OSPL into believing that the accounts were opened and operated for the benefit of Mr Ng, in contravention of Section 201(b) of the SFA.

4   Mr Ng has separately admitted to contravening Section 201(b) of the SFA and paid a civil penalty of $50,000 to MAS without court action.

5   The Attorney-General’s Chambers represented MAS in this action.

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Notes to Editor

(A) The civil penalty regime

(i) A civil penalty action is not a criminal action and does not attract criminal sanctions. The civil penalty regime, designed to complement criminal sanctions and provide a nuanced approach to combat market misconduct, became operational at the beginning of 2004.

(ii) Under section 232(1) of the SFA, whenever it appears that any person has contravened any provision in Part XII of the SFA, MAS may, with the consent of the Public Prosecutor, bring an action in a court against him to seek an order for a civil penalty in respect of that contravention. If the court is satisfied on a balance of probabilities that the person has contravened a provision in this Part which resulted in his gaining a profit or avoiding a loss, the court may make an order against him for the payment of a civil penalty of a sum not exceeding:

(a)  three times the amount of the profit gained or loss avoided by that person, subject to a minimum of either $100,000 (if the person is a corporation) or $50,000 (if the person is not a corporation); or

(b)  (where the contravention has not resulted in the person gaining a profit or avoiding a loss) $2 million, subject to a minimum of $50,000.

(iii) Notwithstanding the above, MAS may also enter into agreements with any person for that person to pay, with or without admission of liability, a civil penalty for a contravention of any provision of Part XII of the SFA.

(B) Insider Trading under Section 218(2)(a) and Section 218(2)(b) of the SFA

Section 218(2)(a) of the SFA prohibits a person who is in possession of materially price-sensitive information concerning a corporation (to which he is connected), which he knows is materially price-sensitive and not generally available, from subscribing for, purchasing, selling, or entering into an agreement to subscribe for, purchase or sell those securities of that corporation.

Section 218(2)(b) of the SFA prohibits a person who is in possession of materially price-sensitive information concerning a corporation (to which he is connected), which he knows is materially price-sensitive and not generally available, from procuring another person to subscribe for, purchase, sell, or enter into an agreement to subscribe for, purchase or sell those securities of that corporation.

(C) Connected Person

Section 218(5) of the SFA provides that a person is connected to a corporation if, amongst others, he occupies a position that may reasonably be expected to give him access to information of a kind to which Section 218 applies by virtue of any professional or business relationship existing between himself (or his employer or a corporation of which he is an officer) and that corporation or a related corporation.

(D)   Employment of Manipulative and Deceptive Devices under Section 201(b) of the SFA

Under Section 201(b) of the SFA, no person shall, directly or indirectly, in connection with the subscription, purchase or sale of any securities engage in any act, practice or course of business which operates as a fraud or deception, or is likely to operate as a fraud or deception, upon any person.

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Last Modified on 26/11/2016